By Tony Alvizu
I have always looked forward to Spring…next to Summer, Fall and Winter, it is my favorite season. I have lived in my current home in the northwest suburbs of Chicago for over 10 years. It is a nice property with great front and back yards, and large enough that I opted to hire a landscape company to assist with lawn maintenance. I have had the same landscape company for the entire decade I have been here – yesterday, my landscape company informed me that it was time to part ways.
Allow me to provide some more background, and then I will get to my crux of this blog posting – customer relationship management, or CRM. My lawn is looking particularly bad this spring – the product of weather, animals and, to my chagrin, improper lawn care and maintenance. I have been pondering for a few years whether to change landscaping companies, and the state of my lawn this year pushed me to formally evaluate new landscaping providers. As I interviewed new companies, they surveyed my property and identified several no-nos in landscaping…most of which my current provider is guilty. To that end, I reached out to my current provider, shared this feedback, and invited them to come out, take a look and help resolve the issues. Instead, the owner said we should part ways, wished me well…and asked for payment for services to date.
Needless to say, I was blown away by this response, and blown away in a bad way. I have been a great customer – and by “great” I mean I pay my invoices on time, raise concerns timely and offer to work through issues. I know there are other criteria for being a “great” customer. I’d like to think that loyalty is also one…and 10+ years of loyalty is what I provided. Now instead of offering to help my situation and work with a great customer, the owner would rather walk away.
I have not yet responded to his “Dear John” response. If I do, I may have to share some stats:
- It costs much more to acquire a new customer than it does to retain an existing one. The quantitative estimate for this ranges from four to 30 percent more.
- A large majority of new business comes from referrals from existing customers. Published research have cited 50-70% of new business may come from referrals.
- Some studies have shown that if this business can retain all of its customers by just one additional month on average, they can achieve an additional three percent of annual growth. If they can retain their customer base for four additional months, they can create double-digit growth–without adding a single customer. (read more on this point at http://www.inc.com/karl-and-bill/its-cheaper-to-keep-em.html )
A former manager and customer told me that the minute you sign up a new customer, the clock starts to when you start losing the customer. Customer retention is not rocket science and is just as important as new business development – more so if you want to manage and reduce costs. What can you do?
- Stay in touch! I can count on one hand (and not use all my fingers) how many times the owner of my former landscaping company came out to visit my property…less that five times in 10 years! I invited the owner to come out and help me solve my problem – he declined.
- Do not decline a customer’s invitation to help solve the problem. See previous bullet.
- Know how to recognize good customers from bad customers. Yes – there are bad customers too. While it may certainly be worth a fight to retain, figure out “when to say when” and cut loose bad customers. Have criteria in place that defines what makes a good customer good, and a bad customer bad.
- Measure customer acquisition costs and don’t under estimate the ease of getting new customers. This posting includes comparison of customer acquisition costs to retention costs, so you need to understand acquisition costs. You cannot manage what you do not measure.
Well – I’m off to find a new landscape company. You can bet that I will provide feedback to my new partner and make changes to support a healthy relationship. While I consider myself a great customer, I too can learn and can take responsibility for my side of the relationship. Maybe I’ll coin the phrase “Customer Responsibility Management”…which abbreviates to…CRM. Coincidence?